It can be a dangerous thing to fall in love with an initial public offering. This is something Facebook (FB) buyers learned the hard way. Some IPOs, however, show more promise than others. Tableau Software (DATA) is one of those companies.
Tableau leads the business-analytics sector in terms of growth rate, and its stock has attracted a $65 price target at UBS and JPM Securities. Still, other analysts are still on the fence, ranking the stock as a hold.
Tableau Software shares enjoyed an incredible couple of days following their public debut at $47 on May 17. By the next day, the stock was trading as high as $59.60. Although it was unable to hold these highs, the correction back to its original IPO offering level was a gradual one on light volume. The shifting intraday momentum, moreover, indicated that the weak hands were flushed out -- thus helping the stock to regain buyers' trust. Three sessions later, Tableau was once again testing highs.
The past several weeks have been rather uneventful for the stock, which has been trapped in a trading range along its all-time highs. Throughout the entire congestion, however, prices have remained above the crucial 50% support zone from the opening-day rally. This has created a potential two-wave continuation buy strategy on the daily and 90-minute time frames, which would confirm on a break of this month's highs.
Even within its recent range, volume has continued to favor the Tableau bulls. We've seen intraday selloffs, but the moves are not attracting many sellers, and volume has declined throughout the past several weeks within the channel itself. This suggests the bulls are just in a holding pattern. An upper-channel breakout would be just the catalyst necessary to once again attract their attention.
JPM Securities may be looking for a price target of $65 but, from a swing trader's perspective, that's going to be harder to accomplish on the next upswing on a daily time frame. A closely measured move on the breakout vs. this month's lows gives me a target zone of $62.38, with $63.40 as a secondary target. $52 is the key price point to hold for support.
Tableau Software closed Wednesday at $56.68.